Japan's shinkansen best in world at safety, punctuality, tech, but not marketing

TOKYO —After 50 years, there’s still something futuristic about the shinkansen, as the completion last week of the Hokuriku shinkansen line linking Tokyo and Kanazawa reminds us. Japan’s are no longer the world’s only bullet trains, or even the fastest – but they are the world’s best, asserts Shukan Post (March 27), which proceeds to ask an unsettling question: If Japan’s really are the best – and they do seem to be, in terms of safety, punctuality and cutting-edge technology – why are French and Chinese bullet trains so heavily favored on the growing international market?

Tokyo and Kanazawa, roughly 300 km apart, are now within 2 hours and 28 minutes of each other, down from nearly four hours by ordinary train. The Hokuriku shinkansen’s top speed, 260 kmh, is not Japan’s fastest, an honor claimed by the Tohoku shinkansen (320 kmh), but very fast all the same, and anyway, is speed everything? Shukan Post’s point is that it is not. French and Chinese trains can outrun Japan’s on the straightaway, the magazine says, but only Japan has met the challenge of curves.

There was no choice. Unlike France and China, Japan has no vast plains. It is a curvaceous country. The technological imperatives curves present is part of what spurred Japanese innovation to such heights. Another spur, of course, is earthquakes. Shinkansens are chock full of sensors. They weigh in if, for example, one train approaches too close to another, or if premonitory tremors portend a quake. The automatic braking system is state of the art – it can stop a train moving at top speed within a mere 300 meters.

The first shinkansen, linking Tokyo and Osaka, had its maiden run on Oct 1, 1964, nine days before the opening of the Tokyo Olympics. In the 50 years since, not a single passenger has been killed or injured in a shinkansen accident – not even, remarkably, during the monstrously destructive March 11, 2011 Great East Japan Earthquake. Shukan Post contrasts this stellar record with France’s, China’s and Spain’s. In France, it says, accidents involving the bullet-like TGV train occur frequently; 40 died in a China bullet train accident in 2011; a derailment in Spain in 2013 killed 79.

Then there’s punctuality. Here again, Japan’s shinkansen knows no peer. Late arrivals, averaged out over the course of a year, are measured in seconds. “By French standards,” the magazine observes archly, “Japanese shinkansens are 100% on time.” Not that the TGV does badly – but their late arrivals must be measured in minutes.

Why, then, do France and China export so much more high-speed rail technology than Japan does? The answer is surprising: Japan’s technology is too good for the world market.

Too good? Is high quality a drawback? It is when it is high beyond what customers think they need, and costly beyond what they want to pay. Developing countries seeking high-speed rail transport are severely budget-conscious, and even developed countries, if they are less earthquake-prone and mountainous than Japan, will perhaps settle for technology that doesn’t meet the most rigid standards. Thus, France’s exports to Spain, South Korea and Morocco, and China’s to Turkey, Romania and Hungary. The world marvels at Japanese technology but shops elsewhere.

“Japan,” Shukan Post concludes, “needs to raise its marketing skills to the level of its technological skills.

TOKYO -- More Japanese companies are using stock grants to motivate employees. The number of companies doing so between April 2014 and February topped 130, 340% more than three years earlier.

Snack-maker Calbee in August will launch a stock program to reward employees who significantly contribute to the company's performance. These workers will be entitled to Calbee shares if the potato chip maker reaches its business target for the financial year ending this month.

The company already has a program that rewards star employees. Now some managers will also be able to hand out shares to high-performing workers. The shares will be allocated to each Calbee division according to how it contributes to the company's results. The per-employee limit is 1 million yen ($8,279) worth of stock.

Takeda Pharmaceutical this fiscal year is beginning a program to grant stock to employees at the general manager level and higher depending on their performance and the company's business results. Previously, the drugmaker only granted stock options to these employees in Japan and paid cash to those at overseas divisions. The cash would be equal to the stock price at the end of each term.

These programs are called employee stock ownership plans. Companies can use them to either give stock to eligible employees or grant shares through profit-sharing or pension schemes. The plans are designed to distribute the benefits of higher stock prices to employees as well as to encourage employees to help raise their company's share price.

According to an official of Mitsubishi UFJ Trust and Banking, a little over 320 Japanese companies have introduced variations of these plans, with 40% of them granting shares to workers.

The move comes as FamilyMart, Japan’s No. 3 convenience store chain, and UNY, the owner of fourth-ranked Circle K Sunkus, seek ways to bulk up amid intensifying competition in a saturated market, a source familiar with the talks told Reuters.

The chains had combined revenue of 2.81 trillion yen in the year ended February 2014, eclipsing second-ranked Lawson Inc to close in on 7-Eleven’s 3.78 trillion yen. Seven-Eleven is owned by Seven & i Holdings Co.

In separate statements, FamilyMart and UNY said they were in discussions but nothing had been decided yet. Shares in FamilyMart fell 3% but UNY surged 8%.

“UNY will be able to create a growth story by strengthening its convenience store business. There are hopes it can pull itself out of a pattern of falling sales and profits,” said Hiromitsu Kamata, head of the Japanese equity target department at Amundi Japan.

On the other hand, a merger is seen as negative for FamilyMart because of the struggling general merchandising stores under UNY’s umbrella, Kamata said.

UNY expects its operating profit to have fallen 13% in the fiscal year ended last month, down for the third straight year as it grapples with weakness in its supermarket business.

In the cut-throat competition among Japan’s ubiquitous convenience stores, which sell everything from freshly brewed coffee to clothes and branded foods, the companies would seek efficiencies in procurement and distribution, the source said.

In other recent sector moves, Lawson said late last year it was buying upmarket chain Seijo Ishii Co.

Kyodo News said the tie-up was likely to be mediated by Itochu Corp, Japan’s third-biggest trading house and the largest shareholder in FamilyMart with a stake of about 37%. Itochu also owns about 3 per cent of UNY.

FamilyMart and UNY have a combined 17,599 stores nationwide, ahead of 7-Eleven’s 17,491, according to Kyodo.